On June 22, according to reports from CCTV News and Global Network, U.S. President Trump announced on Saturday that a "very successful attack" had been carried out on three nuclear facilities in Iran, and this sudden military action has raised concerns among investors about market volatility and the impact on energy prices.

In this heightened volatility, some investors will turn their attention to Top 0DTE Options by Volume, as the volatility presents trading opportunities. Some use this to hedge against the risk of a short-term decline, while others aim to profit from a rapid rebound following unexpected events.

So what exactly are Top 0DTE Options by Volume? Why do they present trading opportunities amid volatility? How should they actually be played? Let's briefly discuss below.

What is a "0DTE options"?

As the name suggests, these are options that are nearing their expiration date.

In a narrow sense, this refers to options contracts that expire on the same day, but in a broader sense, it covers options contracts that expire within the week.

Generally speaking, speculating on Top 0DTE Options by Volume is aimed at achieving big gains with small investments, profiting from price differences by buying low and selling high. What is the logic behind this? It is due to its high leverage effect and high liquidity.

The high leverage effect is manifested on one hand in that the principal required for trading Top 0DTE Options is relatively low (option premium). This is because the value of options consists of intrinsic value and time value. Generally speaking, the closer it is to the expiration date, the time value approaches zero, thus the option premium price is lower.

On the other hand, it is reflected in the extreme sensitivity of its Gamma value. Gamma measures how much Delta changes with a 1 unit change in stock price, which can also be understood as the acceleration of Delta. Delta represents how much the option price will change with a 1 unit change in stock price.

In other words, the larger the Delta, the greater the change in option price, and the larger the Gamma, the faster the change in profit speed. As the expiration date approaches, especially for at-the-money options, there is very large Gamma appreciation potential, and theoretically, the Gamma value can even approach infinity.

*However, it is also important to note that the Vega value of Top 0DTE Options is also high, which means that even minor changes in implied volatility can have a significant impact on option value. In a market unfavorable to investors, it can greatly amplify potential losses.

The Top 0DTE Options by Volume also have higher liquidity because they can take advantage of the rapid fluctuations in the short-term market, making them favored by investors. With the active trading of numerous participants, there are many buy and sell orders, resulting in tighter bid-ask spreads, allowing investors to more easily enter and exit the market at reasonable prices.

What should be paid attention to when trading 'Top 0DTE Options'?

First, attention should be paid to Volume, as it determines whether one can smoothly Buy and Sell.

Next, how to choose a symbol? Trading non-expiration options may involve quite a few strategies, while for speculating on expiration options, we generally only discuss buying Calls and buying Puts.

If bullish on the underlying stock's rise, then Buy Call; if predicting the underlying stock's decline, then Buy Put. If the underlying stock remains volatile and sideways, and options have time decay, then either watch or decisively exit.

Third, costs must be controlled. It is essential to constantly remember to seek the maximum profit with the minimum cost while also being able to bear the risk of losing the entire principal. On this basis, by using options trading to buy low and sell high as prices increase, the potential profit margin may reach multiple times, dozens of times, or even hundreds of times... Even if the direction of the underlying stock is incorrectly judged, leading to a decline in options trading prices, the maximum loss would still only amount to 100% of the principal.

Fourth, there must be stop-loss and take-profit strategies. The stop-loss and take-profit settings for speculative Top 0DTE Options Trading can be relatively aggressive. To avoid losing the entire principal, a stop-loss point can be set at 50%. The take-profit can be relatively loose; theoretically, during the Top 0DTE Options period (a few days leading up to expiration), if the underlying stock experiences a cumulative rise of 5%, the Top 0DTE Options Call can achieve at least a 100% increase; similarly, if the underlying stock falls by 5%, the Put price can also easily double.

Is trading top 0DTE options dangerous and thrilling?

Speculators participating in top 0DTE options trading often possess a strong heart and seasoned experience. However, it is still necessary to repeatedly emphasize that trading top 0DTE options can very likely lead to significant losses in a short time, or for positions to rapidly go to zero, even causing margin call risks due to financing trades.

How big can the risk be? Taking a certain investor's actions as an example. This investor bet that Meta Platforms (FB) would perform poorly before the release of the new earnings report on April 27, 2022, and then bought Put options in advance. On April 25, he purchased Put options that expired on April 29 with a Strike price of 170, and Put options expiring on April 29 with a Strike price of 150.

As of the market close on April 27, due to FB's downward trend, this options operation was quite profitable. However, the risks of top 0DTE options soon emerged. After hours on April 27, FB released the latest quarterly earnings, which did not turn out as bad as the market expected, and after hours, FB's stock price surged by 20%.

After the US stock market opened on April 28, the price of this investor's FB put options plummeted in an instant, wiping out all previous profits within minutes, while watching the value of the held positions drop to zero.

If sold decisively before the earnings announcement, then this Top 0DTE Options Trading could be considered perfect. However, just one day later, the entire Hold Positions underwent a dramatic change.

And this is where the charm of Top 0DTE Options by Volume lies, as well as its extremely high risk. It can be said that this is a dangerous and stimulating game!

How to find Top 0DTE Options on Futu?

Futu provides a [Top 0DTE Options section], where you can find all the options contracts that expire within the week.

Additionally, you can combine multiple options analysis Indicators (such as IV, IV rank, options Volume, etc.) to quickly filter suitable options contracts.

Step: Market > Options > Top 0DTE Options by Volume > Click to enter the list > Filter options

However, it is also recommended that everyone conduct some Papertrade before engaging in live trading, which may increase market awareness and enhance product selection ability.

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